BILL NUMBER: ABX1 28 ENROLLED
BILL TEXT
PASSED THE SENATE JUNE 15, 2011
PASSED THE ASSEMBLY JUNE 15, 2011
AMENDED IN SENATE JUNE 15, 2011
AMENDED IN SENATE JUNE 14, 2011
INTRODUCED BY Assembly Member Blumenfield
MAY 19, 2011
An act to amend Section 6203 of the Revenue and Taxation Code,
relating to taxation, and making an appropriation therefor, to take
effect immediately, bill related to the budget.
LEGISLATIVE COUNSEL'S DIGEST
AB 28, Blumenfield. State Board of Equalization: administration:
retailer engaged in business in this state.
The Sales and Use Tax Law imposes a tax on retailers measured by
the gross receipts from the sale of tangible personal property sold
at retail in this state, or on the storage, use, or other consumption
in this state of tangible personal property purchased from a
retailer for storage, use, or other consumption in this state,
measured by sales price. That law defines a "retailer engaged in
business in this state" to include retailers that engage in specified
activities in this state and requires every retailer engaged in
business in this state and making sales of tangible personal property
for storage, use, or other consumption in this state to register
with the State Board of Equalization and to collect the tax from the
purchaser and remit it to the board.
This bill would further define a retailer engaged in business in
this state as a retailer that has substantial nexus with this state
and a retailer upon whom federal law permits the state to impose a
use tax collection duty. The bill would also include specified
retailers as retailers engaged in business in this state and would
eliminate an exclusion.
This bill would include in the definition of a retailer engaged in
business in this state any retailer entering into agreements under
which a person or persons in this state, for a commission or other
consideration, directly or indirectly refer potential purchasers,
whether by an Internet-based link or an Internet Web site, or
otherwise, to the retailer, provided the total cumulative sales price
from all sales by the retailer to purchasers in this state that are
referred pursuant to these agreements is in excess of $10,000 within
the preceding 12 months, and provided further that the retailer has
cumulative sales of tangible personal property to purchasers in this
state of over $500,000, within the preceding 12 months, except as
specified. This bill would also provide that a retailer entering into
specified agreements to purchase advertising is not a retailer
engaged in business in this state and would define a retailer to
include an entity affiliated with a retailer under federal income tax
law, as specified. This bill would further provide that these
provisions would not apply if the retailer can demonstrate that the
referrals would not satisfy specified United States constitutional
requirements, as provided.
This bill would also include as a retailer engaged in business in
this state as a retailer that is a member of a commonly controlled
group, as defined under the Corporation Tax Law, and a member of a
combined reporting group, as defined, that includes another member of
the retailer's commonly controlled group that, pursuant to an
agreement with or in cooperation with the retailer, performs services
in this state in connection with tangible personal property to be
sold by the retailer.
This bill would provide that the provisions of this bill are
severable.
This bill would appropriate $1,000 from the General Fund to the
State Board of Equalization for administrative operations.
The California Constitution authorizes the Governor to declare a
fiscal emergency and to call the Legislature into special session for
that purpose. Governor Schwarzenegger issued a proclamation
declaring a fiscal emergency, and calling a special session for this
purpose, on December 6, 2010. Governor Brown issued a proclamation on
January 20, 2011, declaring and reaffirming that a fiscal emergency
exists and stating that his proclamation supersedes the earlier
proclamation for purposes of that constitutional provision.
This bill would state that it addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation issued on
January 20, 2011, pursuant to the California Constitution.
This bill would declare that it is to take immediate effect as a
bill providing for appropriations related to the Budget Bill.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6203 of the Revenue and Taxation Code is
amended to read:
6203. (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
(b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
(c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means any retailer that has substantial
nexus with this state for purposes of the commerce clause of the
United States Constitution and any retailer upon whom federal law
permits this state to impose a use tax collection duty. "Retailer
engaged in business in this state" specifically includes, but is not
limited to, any of the following:
(1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
(2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property.
(3) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
(4) Any retailer that is a member of a commonly controlled group,
as defined in Section 25105, and is a member of a combined reporting
group, as defined in paragraph (3) of subdivision (b) of Section
25106.5 of Title 18 of the California Code of Regulations, that
includes another member of the retailer's commonly controlled group
that, pursuant to an agreement with or in cooperation with the
retailer, performs services in this state in connection with tangible
personal property to be sold by the retailer, including, but not
limited to, design and development of tangible personal property sold
by the retailer, or the solicitation of sales of tangible personal
property on behalf of the retailer.
(5) (A) Any retailer entering into an agreement or agreements
under which a person or persons in this state, for a commission or
other consideration, directly or indirectly refer potential
purchasers of tangible personal property to the retailer, whether by
an Internet-based link or an Internet Web site, or otherwise,
provided that both of the following conditions are met:
(i) The total cumulative sales price from all of the retailer's
sales, within the preceding 12 months, of tangible personal property
to purchasers in this state that are referred pursuant to all of
those agreements with a person or persons in this state, is in excess
of ten thousand dollars ($10,000).
(ii) The retailer, within the preceding 12 months, has total
cumulative sales of tangible personal property to purchasers in this
state in excess of five hundred thousand dollars ($500,000).
(B) An agreement under which a retailer purchases advertisements
from a person or persons in this state, to be delivered on
television, radio, in print, on the Internet, or by any other medium,
is not an agreement described in subparagraph (A), unless the
advertisement revenue paid to the person or persons in this state
consists of commissions or other consideration that is based upon
sales of tangible personal property.
(C) Notwithstanding subparagraph (B), an agreement under which a
retailer engages a person in this state to place an advertisement on
an Internet Web site operated by that person, or operated by another
person in this state, is not an agreement described in subparagraph
(A), unless the person entering the agreement with the retailer also
directly or indirectly solicits potential customers in this state
through use of flyers, newsletters, telephone calls, electronic mail,
blogs, microblogs, social networking sites, or other means of direct
or indirect solicitation specifically targeted at potential
customers in this state.
(D) For purposes of this paragraph, "retailer" includes an entity
affiliated with a retailer within the meaning of Section 1504 of the
Internal Revenue Code.
(E) This paragraph shall not apply if the retailer can demonstrate
that the person in this state with whom the retailer has an
agreement did not engage in referrals in the state on behalf of the
retailer that would satisfy the requirements of the commerce clause
of the United States Constitution.
(d) Except as provided in this subdivision, a retailer is not a
"retailer engaged in business in this state" under paragraph (2) of
subdivision (c) if that retailer's sole physical presence in this
state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than 15 days, in whole or in part, in this state during any
12-month period and did not derive more than one hundred thousand
dollars ($100,000) of net income from those activities in this state
during the prior calendar year. Notwithstanding the preceding
sentence, a retailer engaging in convention and trade show
activities, as described in Section 513(d)(3)(A) of the Internal
Revenue Code, is a "retailer engaged in business in this state," and
is liable for collection of the applicable use tax, with respect to
any sale of tangible personal property occurring at the convention
and trade show activities and with respect to any sale of tangible
personal property made pursuant to an order taken at or during those
convention and trade show activities.
(e) Any limitations created by this section upon the definition of
"retailer engaged in business in this state" shall only apply for
purposes of tax liability under this code. Nothing in this section is
intended to affect or limit, in any way, civil liability or
jurisdiction under Section 410.10 of the Code of Civil Procedure.
SEC. 2. The provisions of this act are severable. If any provision
of this act or its application is held invalid, that invalidity does
not affect other provisions or applications that can be given effect
without the invalid provision of application.
SEC. 3. The sum of one thousand dollars ($1,000) is hereby
appropriated from the General Fund to the State Board of Equalization
for administrative operations.
SEC. 4. This act addresses the fiscal emergency declared and
reaffirmed by the Governor by proclamation on January 20, 2011,
pursuant to subdivision (f) of Section 10 of Article IV of the
California Constitution.
SEC. 5. This act is a bill providing for appropriations related to
the Budget Bill within the meaning of subdivision (e) of Section 12
of Article IV of the California Constitution, has been identified as
related to the budget in the Budget Bill, and shall take effect
immediately.